KUALA LUMPUR: Optimax Holdings Bhd is expected to have a good proxy for the growing demand for eye surgeries in Malaysia, underpinned by the ageing population, improving medical insurance penetration, and affluence.

CGS-CIMB Research forecasts surgery volumes to grow by 11.2 per cent in the financial year 2023 (FY23) is in line with Optimax's 10-20 per cent growth target, albeit at the lower end of the range.

The firm said Optimax expects this to be led by three new satellite clinics in the fourth quarter (Q4) of 2022 and seven by Q4 of 2023 and, possibly, ambulatory care centres (ACC), plus the introduction of ReLEx SMILE Pro technology for laser refractive surgeries at its flagship Taman Tun Dr Ismail ACC (Kuala Lumpur) in 2023.

"We understand that the surgery time for ReLEx SMILE Pro is shorter than that of the currently most advanced ReLEx SMILE procedure, thus increasing the volume of surgeries in its operation theaters (OT).

"We also foresee a greater inflow of patients from Singapore to its Johor centres, given the relatively lower cost of eye surgeries in Malaysia versus Singapore," it said.

CGS-CIMB Research said Optimax's growth should also be driven by its plans to open ten satellite clinics by the end of 2023 and its Kempas eye hospital by 2024.

The firm said Optimax's upcoming eye hospital in Kempas, Johor Bahru (Johor), is expected to be operational only by the end of 2024.

"We gather that Optimax is also awaiting the completion of Selgate's new Setia Alam hospital, part of its partnership with Selgate, which is targeted to be completed by Q4 2023 before undergoing renovations and starting operations there.

"Optimax may also set up another eye hospital in Sri Hartamas (smaller sized than Kempas) by leasing the space, though this is still in the preliminary planning stage.

"We project a capital expenditure (capex) of RM12 million/RM14 million/RM14 million in FY22/FY23/FY24, which we believe largely covers all the above expansion plans," it said.

CGS-CIMB Research said Optimax does not foresee any major cost pressures in the near term arising from inflationary pressures.

This is because suppliers have indicated that the prices of its major inventories and consumables will remain stable until at least Q1 2023.

"The 5.6 per cent quarter-on-quarter (QoQ) increase in inventories and consumables costs in Q3 2022 was somewhat one-off.

"We reiterate our Add call with a target price of RM1.12, premised on robust earnings growth prospects," it added.